Africa May Not Reap Much From Its Riches, Report Finds

Africa May Not Reap Much From Its Riches, Report Finds

Africa’s commodity boom of the 1970s is singularly remarkable because it failed to deliver economic and social transformation. In a majority of resource rich countries, a tight clique of corrupt politicians and their acolytes controlled natural resources revenues. Is Africa’s new resource boom on course to produce a boon or a curse?

This article is by Dr. Alex Awiti and it originally appeared on allafrica.com

Africa’s commodity boom of the 1970s is singularly remarkable because it failed to deliver economic and social transformation. In a majority of resource rich countries, a tight clique of corrupt politicians and their acolytes controlled natural resources revenues. Is Africa’s new resource boom on course to produce a boon or a curse?

A report just released by Kofi Annan’s Africa Progress Panel reveals that five deals closed between 2010 and 2012 cost the DR Congo an estimated $1.4 billion (Sh117 billion) in lost revenue, equivalent to national budget allocations to education in 2012. These colossal revenue losses are attributed to fraudulent undervaluation of mineral assets. According to the Africa Progress Panel, a businessman with connections at the highest levels of the DR Congo ruling elite made returns on five deals worth $1.63 billion (Sh136.4 billion) on assets purchased at $275.5 million (Sh23 billion) if independent valuations were used to determine their true value.

On his first Africa tour, China’s Xi Jinping signed a massive resources-for infrastructure deal with the DR Congo. China will provide $9 billion (Sh753.2 billion) to finance construction of roads, railways, hospitals, schools, dams and development of mines. On their part, the Congolese government will provide the China with up to 10 million tonnes of copper and hundreds of thousands of tonnes of cobalt. Two questions beg: Upon which pricing basis was the $9 billion value established? Was any independent valuation undertaken to validate the declared value of the mineral assets?

The DR Congo’s land resources have not spared. In 2011 Feronia Inc., a Canadian company, sought to acquire nearly 90,000 hectares of farmland in the DR Congo for its farming division to grow rice, oil palm and soybeans for export. At the time of negotiating this deal, the DR Congo’s Ambassador to the UK was a sitting member of Feronia’s board of directors.

What Africa Progress Panel has revealed is not unique to the DR Congo. Africa is white hot with minerals and land deals in what could be the second scramble for Africa. Here are other equally scandalous examples…To continue reading click here.